June nonfarm payrolls rise in line with expectations
U.S. stocks ended a volatile holiday-shortened week with losses on Thursday, 02 July 2015, as investors grappled with heightened uncertainty tied to Greece ahead of a Sunday referendum to vote on the country's status as a eurozone member. Financial markets will be closed on Friday to observe U.S.'s Independence Day. Greece and its lenders failed to reach an agreement over bailout funds, resulting in a missed payment to the IMF on Tuesday. The main indexes ended the session marginally lower, as trading amid low volumes was muted.
The Dow Jones Industrial Average slipped 27.80 points, or 0.2%, to 17,730.11 and fell 1.2% over the week. The Nasdaq Composite closed 3.91 points, or 0.1% lower at 5,009.21 and booked a 1.4% loss over the week. The S&P 500 nded one point lower at 2,076.27 and recorded a 1.2% loss over the week, its second weekly loss in a row.
On Thursday, investors digested reports on the health of the labor market with monthly jobs report and weekly unemployment claims coming in softer than expected.
Equity indices held modest gains at the start after the Nonfarm Payrolls report for June missed estimates with the wage component showing no monthly growth. The lack of wage growth was viewed as an argument in favor of the Federal Reserve delaying its first rate hike, evidenced by a surge in the Treasury market.
Despite opening on a higher note, stocks retreated from their early levels, turning negative during late morning action. Interestingly, the benchmark index slipped below its flat line after the International Monetary Fund admitted that Greece will need approximately EUR50 billion in funds over the next three years and that a 20-year grace period should take place before any repayment begins. The comments from the IMF are likely to galvanize the 'no' camp ahead of Sunday's referendum in Greece.
Six sectors ended the day in negative territory while energy, technology, telecom services, and utilities posted gains. The utilities sector held the lead throughout the session thanks to the morning drop in Treasury yields.
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US economic data on Thursday showed that nonfarm payrolls rose 223,000 in June, roughly in line with a forecast for a rise of 225,000, while the unemployment rate fell to 5.3% from 5.5%. Although less than stellar, the data might be viewed by gold buyers as leaving the Federal Reserve on track to begin lifting interest rates later this year, a potential negative for gold.
Other economic data showed that the initial claims level increased to 281,000 for the week ending June 27 from an unrevised 271,000 while the consensus expected an increase to 271,000. Despite the big increase, the four-week moving average increased by only 1,000 to 275,000, leaving the overall trend near a 15-year low. Factory orders declined 1.0% in May following a downwardly revised -0.7% (from -0.4%) decline in April while the consensus expected a decline of 0.5%.
Durable goods orders declined 2.2% in May, which was revised down from a 1.8% decline in the advance report. The entire decline resulted from continued weakness in the transportation sector with those orders declining 6.5% in May after falling 4.0% in April.
The 10-yr note backed away from its high ahead of the close, but still ended firmly in the green with the benchmark yield slipping four basis points to 2.38%.
Bullion prices once again ended lower at Comex on Thursday, 02 July 2015. Gold futures fell for a third session in a row on Thursday to settle at their lowest level in more than three months. Traders attributed the price decline to expectations that Greece will eventually reach an agreement with creditors, with no lasting ill effects on global financial markets.
Gold for August delivery on Comex fell $5.80, or 0.5%, to settle at $1,163.50 an ounce, after trading as low as $1,155.80. For the holiday-shortened week, prices saw a loss of around 0.8%.
September silver lost 1.5 cents, or 0.1%, to end at $15.562 an ounce, also the lowest since mid-March. It was more than 1% lower on the week.
U.S. oil futures took a modest turn lower before the close on Thursday, 02 July 2015 at Nymex. Futures finished the holiday-shortened week with a loss of 4.5% following U.S. weekly reports showing an unexpected rise in crude supplies and 2015's first increase in the number of active oil-drilling rigs.
On the New York Mercantile Exchange, West Texas Intermediate August crude shed 3 cents to settle at $56.93 a barrel. Earlier, prices had found support from dollar weakness in the wake of the latest monthly U.S. jobs report. Prices, however, immediately began to pare gains after the weekly rig-count data.
Monday's data will be limited to the 10:00 ET release of the ISM Services Index for June.
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